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Assessing agglomeration economies in a spatial framework with endogenous regressors

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  • Michael J. Artis

    ()
    (Department of Economics, University of Swansea)

  • Ernest Miguélez

    ()
    (Faculty of Economics, University of Barcelona)

  • Rosina Morenos

    ()
    (Faculty of Economics, University of Barcelona)

Abstract

This paper is concerned with the influence of agglomeration economies on economic outcomes across British regions. The concentration of economic activity in one place can foster economic performance due to the reduction in transportation costs, the ready availability of customers and suppliers, and knowledge spillovers. However, the concentration of several types of intangible assets can boost productivity as well. Thus, using an interesting dataset which proxies regional productivity, we will assess the relative importance of agglomeration and other assets, controlling for endogeneity, spatial autocorrelation and heteroscedasticity at the same time. Our results suggest that agglomeration has a definite positive influence on productivity, although our estimates of its effect are dramatically reduced when spatial dependence and other hitherto omitted variables proxying intangible assets are controlled for.

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Bibliographic Info

Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 201112.

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Length: 40 pages
Date of creation: Jul 2011
Date of revision: Jul 2011
Handle: RePEc:ira:wpaper:201112

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Postal: Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona
Web page: http://www.ub.edu/irea/
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Keywords: Agglomeration economies; intangible assets; endogeneity; spatial autocorrelation; spatial HAC estimation. JEL classification:C21; J24; R10; R11; R12.;

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Cited by:
  1. Michael Artis & Declan Curran & Marianne Sensier, 2011. "Investigating Agglomeration Economies in a Panel of European Cities and Regions," SERC Discussion Papers 0078, Spatial Economics Research Centre, LSE.
  2. Hashiguchi, Yoshihiro & Chen, Kuang-hui, 2012. "Assessing agglomeration economies in the Yangzi River Delta, China : a bayesian spatial econometric approach," IDE Discussion Papers 339, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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